The Securities and Exchange Commission, SEC, announced that it has no interest in stifling innovation in Nigeria’s fintech space and that its objective is to get more Nigerians into well-regulated investment vehicles.
This was disclosed by Okey Umeano, Chief Economist at SEC, at the Nairametrics webinar titled “FinTech rising: Creating synergy between fintech players and regulators” which was held on Saturday, 1st of May.
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What the SEC is saying
- Mr Umeano added that SEC supports an efficient market and has no interest in creating regulatory roadblocks for the industry.
- He added that one of the SEC’s objectives is to get even more young Nigerians into the investment market, saying, “we are happy fintechs are offering options in line with what we want to do.”
- “However, the regulator wants innovation within guidelines,” he added.
He also disclosed that the SEC has to “balance innovation with protecting investors, citing that the SEC has made efforts to bridge the gap with the creation of offices dedicated to regulating fintechs and listening to complaints of startups.
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On bridging the gap
He added that SEC launched a fintech committee with relevant stakeholders who have done extensive work to implement a strategic engagement roadmap for fintechs in Nigeria.
He also urged Nigerian fintech startups to form associations because “it is easier to work with associations than individual fintechs.”
However, Kola Aina, Founding partner at Ventures Platform warned that over-regulation causes shocks in the industry, especially with the release of sudden circulars which causes concerns for investors, citing that laws do not create employment and innovations cannot always fit within the law.
“Where we are, the priority needs to be in engaging innovation,” Aina said.
“We need to focus more on dialogue and consider the impact of circulars on companies,” he added.
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What you should know
- Recall Nairametrics reported last month that Fintech trading platforms like Chaka, Trove, Bamboo, and others that allow Nigerians to invest and trade in stocks listed on the Nigerian and foreign stock exchanges were declared illegal by the SEC.
- The SEC stated that by the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.
I couldn’t agree more with Aina’s comment. We are in a fast changing world as such flexibility by Regulators is invaluable. I’d suggest that as far as the intentions of the businesses are noble, a great way to go would be for Regulators to engage with the relevant businesses, get their data, invite them to a workshop and agree on roadmaps to align with the regulations. Truth is, Regulators have a great deal of work to do in catching up with pace of innovation globally whilst striking a balance of not stifling innovation, growth and productivity. In the case of the latest circular by SEC on FINTECH companies offering US stock to Nigerians, my response was to pull out my money from Bamboo until further notice from SEC. Who knows how many others that took same decision. This unfortunately impacts businesses, jobs and growth. This is the import of Aina’s comment that such circulars indeed create shocks in businesses.